Detailed Scheduling and Planning Key Definitions:

Action Message: An output of a system that identifies the need for and the type of action to be taken to correct a current or potential problem. Examples of action messages in an MRP system include release order, reschedule in, reschedule out, and cancel. Syn: exception message, action report. Activation: Putting a resource to work. Advanced Planning and Scheduling Technique: Techniques that deal with analysis and planning of logistics and manufacturing over the short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan." The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning. Allocation: 1) The classification of quantities of items that have been assigned to specific orders but have not yet been released from the stockroom to production. It is an "uncashed" stockroom requisition. 2) A process used to distribute material in short supply. Syn: assignment. See: reservation. Alternate Routing: A routing, usually less preferred than the primary routing, but resulting in an identical item. Alternate routings may be maintained in the computer or off-line via manual methods, but the computer software must be able to accept alternate routings for specific jobs. Availability: The percentage of time that a worker or machine is capable of working. Available Time: The number of hours a work center can be used based on management decisions regarding shift structure, extra shifts, regular overtime, observance of weekends and public holidays, shutdowns, and the like. See: capacity available, utilization. Budgeted Capacity: The volume/mix of throughput on which financial budgets were set and overhead/burden absorption rates established.

Buffer Management: In the theory of constraints, a process in which all expediting in a shop is driven by what is scheduled to be in the buffers (constraint, shipping, and assembly buffers). By expediting this material into the buffers, the system helps avoid idleness at the constraint and missed customer due dates. In addition, the causes of items missing from the buffer are identified, and the frequency of occurrence is used to prioritize improvement activities. Buffer Stock: 1) In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. 2) In the context of master production scheduling, the additional inventory and capacity planned as protection against forecast errors and short-term changes in the backlog. Overplanning can be used to create safety stock. Syn: buffer stock, reserve stock. See: hedge, inventory buffer. Business to Business (B2B): Business being conducted over the Internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations, reducing costs, improving quality, reducing delivery lead time, and improving due-date performance. By Product: A material of value produced as a residual of or incidental to the production process. The ratio of byproduct to primary product is usually predictable. By-products may be recycled, sold as is, or used for other purposes. See: co-product. Calculated Capacity: (rated capacity) The expected output capability of a resource or system. Capacity is traditionally calculated from such data as planned hours, efficiency, and utilization. The rated capacity is equal to hours available x efficiency x utilization. Syn: calculated capacity, effective capacity, nominal capacity, standing capacity. Capacity Available: The capability of a system or resource to produce a quantity of output in a particular time period. Syn: available capacity. See: capacity, available time. Capacity Control: The process of measuring production output and comparing it with the capacity plan, determining if the variance exceeds preestablished limits, and taking corrective action to get back on plan if the limits are exceeded. See: input/output control. Central Point Scheduling: A variant of scheduling that employs both forward and backward scheduling, starting from the scheduled start date of a particular operation.

Collaborative planning, forecasting, and replenishment (CPFR): 1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. CPFR is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards. Syn: collaborative planning. Decentralized inventory control: Inventory decision making exercised at each stocking location for SKUs at that location. Decoupling inventory: An amount of inventory kept between entities in a manufacturing or distribution network to create independence between processes or entities. The objective of decoupling inventory is to disconnect the rate of use from the rate of supply of the item. See: buffer. Decoupling points: The locations in the product structure or distribution network where inventory is placed to create independence between processes or entities. Selection of decoupling points is a strategic decision that determines customer lead times and inventory investment. See: control points. Dedicated capacity: A work center that is designated to produce a single item or a limited number of similar items. Equipment that is dedicated may be special equipment or may be grouped general-purpose equipment committed to a composite part. Dedicated line: A production line permanently configured to run well-defined parts, one piece at a time, from station to station. Drum-buffer-rope (DBR): The theory of constraints method for scheduling and managing operations that have an internal constraint or capacity-constrained resource. Effective date. The date on which a component or an operation is to be added or removed from a bill of material or an assembly process. The effective dates are used in the explosion process to create demands for the correct items. Normally, bills of material and routing systems provide for an effectivity start date and stop date, signifying the start or stop of a particular relationship. Effectivity control also may be by serial number rather than date. Syn: effectivity, effectivity date.

Engineer-to-order: Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings. Syn: design-to-order. Excess capacity: Capacity that is not used to either produce or protect the creation of throughput. First in, first out (FIFO): A method of inventory valuation for accounting purposes. The accounting assumption is that the oldest inventory (first in) is the first to be used (first out), but there is no necessary relationship with the actual physical movement of specific items. See: first-come-first-served rule, average cost system. Flexibility: 1) The ability of the manufacturing system to respond quickly, in terms of range and time, to external or internal changes. Six different categories of flexibility can be considered: mix flexibility, design changeover flexibility, modification flexibility, volume flexibility, rerouting flexibility, and material flexibility (see each term for a more detailed discussion). In addition, flexibility involves concerns of product flexibility. Flexibility can be useful in coping with various types of uncertainty (regarding mix, volume, and so on). 2) The ability of a supply chain to mitigate, or neutralize, the risks of demand forecast variability, supply continuity variability, cycle time plus lead-time uncertainty, and transit time plus customs-clearance time uncertainty during periods of increasing or diminishing volume. Forward flow scheduling: A procedure for building process train schedules that starts with the first stage and proceeds sequentially through the process structure until the last stage is scheduled. Gateway work center: A work center that performs the first operation of a particular routing sequence. Idle capacity: The available capacity that exits on nonconstraint resources beyond the capacity required to support the constraint. Idle capacity has two components: protective capacity and excess capacity. Idle time: The time when operators or resources (e.g., machines) are not producing product because of setup, maintenance, lack of material, lack of tooling, or lack of scheduling.

Inventory accounting: The branch of accounting dealing with valuing inventory. Inventory may be recorded or valued using either a perpetual or a periodic system. A perpetual inventory record is updated frequently or in real time, while a periodic inventory record is counted or measured at fixed time intervals, e.g., every two weeks or monthly. Inventory valuation methods of LIFO, FIFO, or average costs are used with either recording system. Inventory buffer: Inventory used to protect the throughput of an operation or the schedule against the negative effects caused by delays in delivery, quality problems, delivery of incorrect quantity, and so on. Syn: inventory cushion. See: fluctuation inventory, safety stock. Inventory policy: A statement of a company's goals and approach to the management of inventories. Item master file: A file containing all item master records for a product, product line, plant, or company. See: master file. Joint replenishment: Coordinating the lot sizing and order release decision for related items and treating them as a family of items. The objective is to achieve lower costs because of ordering, setup, shipping, and quantity discount economies. This term applies equally to joint ordering (family contracts) and to composite part (group technology) fabrication scheduling. Syn: joint replenishment system. Last in, first out (LIFO): A method of inventory valuation for accounting purposes. The accounting assumption is that the most recently received (last in) is the first to be used or sold (first out) for costing purposes, but there is no necessary relationship with the actual physical movement of specific items. See: average cost systems. Load profile: A display of future capacity requirements based on released and/or planned orders over a given span of time. Syn: load projection. See: capacity requirements plan. Load projection: Syn: load profile. A display of future capacity requirements based on released and/or planned orders over a given span of time. Syn: load projection. See: capacity requirements plan. Lot sizing: The process of, or techniques used in, determining lot size. See: order policy.

Lot splitting: Dividing a lot into two or more sublots and simultaneously processing each sublot on identical (or very similar) facilities as separate lots, usually to compress lead time or to expedite a small quantity. Syn: operation splitting. Low-level code: A number that identifies the lowest level in any bill of material at which a particular component appears. Net requirements for a given component are not calculated until all the gross requirements have been calculated down to that level. Low-level codes are normally calculated and maintained automatically by the computer software. Syn: explosion level. Machine center: A production area consisting of one or more machines (and, if appropriate for capacity planning, the necessary support personnel) that can be considered as one unit for capacity requirements planning and detailed scheduling. Machine loading: The accumulation by workstation, machine, or machine group of the hours generated from the scheduling of operations for released orders by time period. Machine loading differs from capacity requirements planning in that it does not use the planned orders from MRP but operates solely from released orders. It may be of limited value because of its limited visibility of resources. manufacturing order: A document, group of documents, or schedule conveying authority for the manufacture of specified parts or products in specified quantities. Syn: job order, manufacturing authorization, production order, production release, run order, shop order, work order. See: assembly parts list, batch card, blend order, fabrication order, mix ticket, work order. material-dominated scheduling (MDS): A technique that schedules materials before processors (equipment or capacity). This technique facilitates the efficient use of materials. MDS can be used to schedule each stage in a process flow scheduling system. MRP systems use material-dominated scheduling logic. See: processor-dominated scheduling. min-max system: A type of order point replenishment system where the "min" (minimum) is the order point, and the "max" (maximum) is the "order up to" inventory level. The order quantity is variable and is the result of the max minus available and on-order inventory. An order is recommended when the sum of the available and onorder inventory is at or below the min.

mixed-flow scheduling: A procedure used in some process industries for building process train schedules that start at an initial stage and work toward the terminal process stages. This procedure is effective for scheduling where several bottleneck stages may exist. Detailed scheduling is done at each bottleneck stage. operations sequencing: A technique for short-term planning of actual jobs to be run in each work center based upon capacity (i.e., existing workforce and machine availability) and priorities. The result is a set of projected completion times for the operations and simulated queue levels for facilities. order policy: A set of procedures for determining the lot size and other parameters related to an order. See: lot sizing. period order quantity: A lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods, e.g., weeks into the future. The number of periods to order is variable, each order size equalizing the holding costs and the ordering costs for the interval. See: discrete order quantity, dynamic lot sizing. perpetual inventory: An inventory recordkeeping system where each transaction in and out is recorded and a new balance is computed. phantom bill of material: A bill-of-material coding and structuring technique used primarily for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. This permits MRP logic to drive requirements straight through the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. This technique also facilitates the use of common bills of material for engineering and manufacturing. Syn: blowthrough, transient bill of material. See: pseudo bill of material. planned load: The standard hours of work required by the planned production orders. probable scheduling: A variant of scheduling that considers slack time to increase or decrease the calculated lead time of an order. Interoperation and administrative lead time components are expanded or compressed by a uniform "stretching factor" until no difference exits between the schedule of operations obtained by forward and backward scheduling. See: lead time scheduling.

process flow scheduling A generalized method for planning equipment usage and material requirements that uses the process structure to guide scheduling calculations. It is used in flow environments common in process industries. process manufacturing Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in either batch or continuous mode. See: project manufacturing. process train A representation of the flow of materials through a process industry manufacturing system that shows equipment and inventories. Equipment that performs a basic manufacturing step, such as mixing or packaging, is called a process unit. Process units are combined into stages, and stages are combined into process trains. Inventories decouple the scheduling of sequential stages within a process train. processor-dominated scheduling A technique that schedules equipment (processor) before materials. This technique facilitates scheduling equipment in economic run lengths and the use of low-cost production sequences. This scheduling method is used in some process -industries. See: material-dominated scheduling. productive capacity In the theory of constraints: The maximum of the output capabilities of a resource (or series of resources) or the market demand for that output for a given time period. See: excess capacity, idle capacity, protective capacity. projected available balance An inventory balance projected into the future. It is the running sum of on-hand inventory minus requirements plus scheduled receipts and planned orders. Syn: projected available inventory. protective capacity The resource capacity needed to protect system throughput-ensuring that some capacity above the capacity required to exploit the constraint is available to catch up when disruptions inevitably occur. Nonconstraint resources need protective capacity to rebuild the bank in front of the constraint or capacityconstrained resource (CCR) and/or on the shipping dock before throughput is lost and to empty the space buffer when it fills. quantity discount A price reduction allowance determined by the quantity or value of a purchase. queue time The amount of time a job waits at a work center before setup or work is performed on the job. Queue time is one element of total manufacturing lead time. Increases in queue time result in direct increases to manufacturing lead time and work-in-process inventories.

rescheduling The process of changing order or operation due dates, usually as a result of their being out of phase with when they are needed. rework Reprocessing to salvage a defective item or part. risk pooling A method often associated with the management of inventory risk. Manufacturers and retailers that experience high variability in demand for their products can pool together common inventory components associated with a broad family of products to buffer the overall burden of having to deploy inventory for each discrete product. safety capacity In the theory of constraints: The planned amount by which the available capacity exceeds current productive capacity. This capacity provides protection from planned activities, such as resource contention, and preventive maintenance and unplanned activities, such as resource breakdown, poor quality, rework, or lateness. Safety capacity plus productive capacity plus excess capacity is equal to 100% of capacity. Syn: capacity cushion. See: protective capacity. safety lead time An element of time added to normal lead time to protect against fluctuations in lead time so that an order can be completed before its real need date. When used, the MRP system, in offsetting for lead time, will plan both order release and order completion for earlier dates than it would otherwise. Syn: protection time, safety time. scheduled load The standard hours of work required by scheduled receipts, i.e., open production orders. scrap Material outside of specifications and possessing characteristics that make rework impractical. semifinished goods Products that have been stored uncompleted awaiting final operations that adapt them to different uses or customer specifications. setup time The time required for a specific machine, resource, work center, process, or line to convert from the production of the last good piece of item A to the first good piece of item B. Syn: setup lead time.

setup time The time required for a specific machine, resource, work center, process, or line to convert from the production of the last good piece of item A to the first good piece of item B. Syn: setup lead time. shelf life The amount of time an item may be held in inventory before it becomes unusable. shrinkage Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc. target inventory level In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity. It is often called an order-up-to inventory level and is used in a periodic review system. Syn: order-up-to level. theoretical capacity The maximum output capability, allowing no adjustments for preventive maintenance, unplanned downtime, shutdown, etc. time-phased order point (TPOP) MRP-like time planning logic for independent demand items, where gross requirements come from a forecast, not via explosion. This technique can be used to plan distribution center inventories as well as to plan for service (repair) parts, because MRP logic can readily handle items with dependent demand, independent demand, or a combination of both. Time-phased order point is an approach that uses time periods, thus allowing for lumpy withdrawals instead of average demand. When used in distribution environments, the planned order releases are input to the master schedule dependent demands. See: fixed reorder quantity inventory model. yield The amount of good or acceptable material available after the completion of a process. Usually computed as the final amount divided by the initial amount converted to a decimal or percentage. In manufacturing planning and control systems, yield is usually related to specific routing steps or to the parent item to determine how many units should be scheduled to produce a specific number of finished goods. For example, if 50 units of a product are required by a customer and a yield of 70% is expected then 72 units (computed as 50 units divided by .7) should be started in the manufacturing process. Syn: material yield. See: scrap factor, yield factor.

zero inventories Syn: Just-in-Time. A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product, from design engineering to delivery, and includes all stages of conversion from raw material onward. The primary elements of Just-in-Time are to have only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths, and lot sizes; to incrementally revise the operations themselves; and to accomplish these activities at minimum cost. In the broad sense, it applies to all forms of manufacturing-job shop, process, and repetitive-and to many service industries as well. Syn: short-cycle manufacturing, stockless production, zero inventories Theory of constraints (TOC) A holistic management philosophy developed by Dr. Eliyahu M. Goldratt that is based on the principle that complex systems exhibit inherent simplicity. Even a very complex system comprising thousands of people and pieces of equipment can have, at any given time, only a very, very small number of variablesperhaps only one, known as a constraint-that actually limit the ability to generate more of the system's goal.